Is it necessary to register for VAT in Poland when providing services to a company from outside the EU? What is the relationship between the provision of remote services and VAT exemption? We answer – the value of services provided by the taxpayer, performed remotely, will not be included in the so-called subjective exemption resulting from Art. 113 section 1 of the VAT Act. When providing this type of services, there will generally be no situation in which the taxpayer should first register for VAT in Poland.
The place of providing remote services and VAT exemption
Let’s assume that the taxpayer provides remote IT services (e.g. programming services) to companies registered outside the EU. The key here is to determine the place where such a service will be provided.
Pursuant to Art. 28b section 1 of the VAT Act
“The place where the service is provided in the case of provision of services to a taxpayer is the place where the taxpayer who is the recipient of the service has his business seat (…)”.
From this perspective, it does not matter whether we are dealing with a contractor from the European Union or from a third country. Therefore, a remote service provided to taxpayers who do not have their registered office/place of business in Poland is not subject to VAT in Poland.
Who is a taxpayer?
Pursuant to art. 15 section 1 of the VAT Act, a taxpayer is an entity that independently conducts business activities referred to in Art. 15 section 2 of the VAT Act or economic activity corresponding to this activity, regardless of the purpose or result of such activity. The concept of taxpayer used to determine the place where the service therefore covers entities operating both in Poland and outside Poland.
Therefore, the foreign contractor will be considered a taxpayer in the sense indicated above. The place of provision of the service to him, in accordance with Art. 28b of the VAT Act, will be the place where the entity has its registered office (registered office outside the EU).
The entity obliged to settle the tax due for the provision of such a service is the buyer. If the service is provided to a contractor from outside the country and from outside the European Union, the tax obligation is transferred to the purchaser of the service. From the perspective of the person providing the service, this will be an activity not subject to VAT in Poland. We are then dealing with the so-called export of services.
How the tax exemption works?
Pursuant to art. 113 section 1 of the VAT Act, taxpayers whose total sales value in the previous tax year did not exceed PLN 200,000 are entitled to exemption from VAT. Of course, there are a few exceptions to this rule, but we will not discuss them today.
Remote services and VAT exemption (amount).
The limit amount (i.e. PLN 200,000) that entitles you to the subjective exemption applies – in accordance with Art. 2 point 22 of the VAT Act – paid supply of goods and paid provision of services within the territory of the country, export of goods and intra-Community supply of goods. This is extremely important because the so-called export of services (which takes place in the situation described) is not included in the limit of PLN 200,000. This position is confirmed by individual interpretations.
Tax ruling of the Director of IS in Katowice, ref. no. IBPP4/443-454/14/PK, of December 22, 2014.
“(…) the concept of sale (…) should be understood as the paid delivery of goods and the paid provision of services within the territory of the country, the export of goods and the intra-Community supply of goods. A contrario, they do not constitute sales within the meaning of the Goods and Services Tax Act, among others. incl.: paid deliveries of goods and paid services outside the territory of the country (i.e. deliveries of goods and services whose place of supply is outside Poland).
Tax ruling of the Director of KIS of April 26, 2019, ref. no. 0114-KDIP1-2.4012.120.2018.3.RD
“(…) when determining the right to personal exemption, (…), one should take into account, among others: value of taxable sales of goods and services in the territory of the country. Consequently, the provision of services whose place of taxation is outside the territory of the country is not taken into account.
Summary
Taking the above into account, it should be stated that the value of services provided remotely to a contractor from outside the EU will not be included in the amount of the so-called subjective exemption resulting from Art. 113 section 1 of the VAT Act.
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